Monthly Archives: March 2012

As usual the reality below the fold contradicts the headline in this Bloomberg story on Polish shale gas.

Europe’s best hope for a shale-gas boom is fading as explorers in Poland confront rising taxes, a lack of rigs and rocks that are harder to drill than expected.

“The growth of shale in Poland will be slower than in the U.S. because it would need to build the infrastructure the U.S. already had available,” said Laura Loppacher, an oil and gas analyst at Jefferies International Ltd. in London. “We know the gas in place is there, but it’s unclear if it can be extracted at a rate that’s commercial.”

An interesting story from Oil and Gas Eurasia signifies a more subtle side of shale opposition. Overt opposition to shale depends on objections based on actual environmental fears, or occassionally honest up front fears, as from Caroline Lucas the other evening, that shale disrupts the carbon debate.

Covert opposition to shale takes the form of either denying geology, over-estimating commerical issues or exaggerating public opposition. Caroline Lucas and the Guardian often cite a Deutsche Bank analysis on shale from last October for example that says European shale won’t amount to much due to the same reasons the Poyry report for Ofgem echoed recently. First deny geology, while talking up issues now irrelevant such as population density and water needs and the old chestnut that Europe has no service industry. Tell that to the dozen exhibitors at the recent Barcelona unconventional conference for one example. But within the DB analysis is something more covert and sneaky. Stressing public opposition to shale as a self fulfilling barrier to shale creates a pessimistic view of potential. These views serves some interests far removed from Green or local protestors. For example, back in the former USSR, Oil and Gas Eurasia find Russian financial interests more than happy to talk up opposition to shale as one more reason for them to be blasé about shale:

<p>Hard to consider in a UK where the Peak Oil view is considered such&nbsp;<a href=”http://www.telegraph.co.uk/finance/oilprices/7203172/Britain-faces-oil-crunch-within-five-years-Richard-Branson-warns.html” target=”_blank”>indisputable</a>&nbsp;mainstream opinion that questioning it is considered extreme, but today’s New York Times has a front page piece on “<a href=”http://www.nytimes.com/2012/03/23/business/energy-environment/inching-toward-energy-independence-in-america.html?_r=1&amp;ref=global-home” target=”_blank”>US Inches towards Goal of Energy Independence”</a>. Will this article make it to the New York Times section of this Sunday’s Observer Newspaper, the Sunday version of the Guardian which, like Caroline Lucas the other night, remains relentlessly dismissive of the possibility of European shale resources? Let’s hope it does, because the UK seriously needs a reality check.&nbsp;<a href=”index.php/2008/107-current-affairs/1066-yet-another-par” target=”_blank”>Four years ago I</a> read about shale gas and asked why not here, and the majority of UK media still know nothing about it. Thanks to our famously incurious media that absolutely refuse to print anything outside the narrative of declining resource and looming catastrophe, Europe may barely hear about the US story until the US recovery is so strong that it will swamp us:</p><p style=”margin-left: 30px;”>&nbsp;<span style=”color: #008000;”>Across the country, the oil and gas industry is vastly increasing production, reversing two decades of decline.</span></p><p class=”p1″ style=”margin-left: 30px;”>&nbsp;<span style=”color: #008000;”>At the same time, Americans are pumping significantly less gasoline.&nbsp;</span></p><hr id=”system-readmore” /><p class=”p1″ style=”margin-left: 30px;”>&nbsp;<span style=”color: #008000;”>Taken together, the increasing production and declining consumption have unexpectedly brought the United States markedly closer to a goal that has tantalized presidents since Richard Nixon: independence from foreign energy sources, a milestone that could reconfigure American foreign policy, the economy and more. In 2011, the country imported just 45 percent of the liquid fuels it used, down from a record high of 60 percent in 2005.</span></p><p>But we could, and should, hear more about US energy independence due to the political game changer;</p><p style=”margin-left: 30px;”>&nbsp;<span style=”color: #008000;”>“There is no question that many national security policy makers will believe they have much more flexibility and will think about the world differently if the United States is importing a lot less oil,” said Michael A. Levi, an energy and environmental senior fellow at the Council on Foreign Relations. “For decades, consumption rose, production fell and imports increased, and now every one of those trends is going the other way.”</span></p><p>This is what will really change everything for the better. I’ve addressed the role of fracking in oil production for the past couple of years, but I have concentrated more on shale gas than shale energy in general. But this from Texas shows the potential:</p><p style=”margin-left: 30px;”><span style=”color: #008000;”>&nbsp;Pioneer’s rising fortunes can be seen on a 10,000-acre field known as the Giddings Estate, a forsaken stretch inhabited by straggly coyotes, rabbits, rattlesnakes and cows that forage for grass between the sagebrush. When Pioneer bought it in 2005, the field’s hundred mostly broken-down wells were producing a total of 50 barrels a day. “It was a diamond in the rough,” said Robert Hillger, who manages it for Pioneer.</span></p><p style=”margin-left: 30px;”>&nbsp;<span style=”color: #008000;”>Today, the Giddings field is pumping 7,000 barrels a day, and Pioneer expects to hit 25,000 barrels a day by 2017.</span></p><p>Let’s be crystal clear:what is happening on the Giddings Estate can happen several places in Europe as well. Caroline Lucas and Richard Branson may be able to convince some people that shale gas is too risky, but turning down $115 a barrel oil sounds like a hard sell &nbsp;But the first place we need to start is to understand that fracking is not only about natural gas but also oil. The risk dynamics change completely for oil instead of gas.&nbsp;</p><p>A second strand of the Times story that needs to be more widely read is the impact not only of rising supply, but also of falling demand. While the experts at Green NGOs know what is happening, the story isn’t getting through to the base, often still convinced that we are inexorably using more energy, a key tenet of Peak Oil. &nbsp;Great piece on another conventional wisdom smasher earlier this week in the <a href=”http://www.startribune.com/business/143715606.html” target=”_blank”>NYT:</a></p><p class=”p1″ style=”margin-left: 30px;”><span style=”color: #008000;”>Customer satisfaction surveys show cars having fewer and fewer problems with each passing year. Much of this improvement is a result of intense global competition — a carmaker simply can’t allow its products to leak oil, break down or wear out prematurely.</span></p><p class=”p1″ style=”margin-left: 30px;”><span style=”color: #008000;”>But another, less obvious factor has been the government-mandated push for lower emissions.</span></p><p class=”p1″ style=”margin-left: 30px;”><span style=”color: #008000;”>”The California Air Resources Board and the EPA have been very focused on making sure that catalytic converters perform within 96 percent of their original capability at 100,000 miles,” said Jagadish Sorab, technical leader for engine design at Ford Motor. “Because of this, we needed to reduce the amount of oil being used by the engine to reduce the oil reaching the catalysts.</span></p><p class=”p1″><span style=”color: #000000;”>As someone who got their license in 1970’s America, where you could buy a dollar’s worth of gasoline the year I graduated high school &nbsp;without total embarrassment , the transformation over many years has been dramatic. Cars and especially US ones, were the original symptom of a society built on planned obsolescence. The success of the US auto industry is a significant victory for sustainable development, but &nbsp;many greens are too blind to see it. I thought I was driving a 160,000 BMW because I’m cheap and it doesn’t want to die. It seems I’m simply a trendsetter.</span></p><p>&nbsp;</p><p class=”p1″ style=”margin-left: 30px;”>&nbsp;</p><p class=”p1″>&nbsp;</p><p class=”p1″><span color=”#008000″ style=”color: #008000;”><br /></span></p><p class=”p1″ style=”margin-left: 30px;”>&nbsp;</p>

Last week in Barcelona I met with co-conspirator Gerry Medaisko when he slipped over the Pyrenees in a bit more style than he did when he first went from France to join De Gaulle in 1942. That’s how long Gerry has been around! Gerry updated the audience at the conference (130 delegates and zero demonstrators) with what is happening in France.

Although the conventional wisdom is that France has banned shale, it’s a bit more complex. The same law that banned hydraulic fracturing also legislated that an evaluation commission be set up to provide an annual report on current technology, as various people pointed out that shale is a work in progress. Not a lot of people were aware of that of course, and now greens are not well pleased. They even accuse the government of hypocrisy. Going back to 1942 again, we must echo the words of another (fictional) Frenchman, Captain Louis Renault from Casablanca: I’m shocked!

The chancellor fired the starting gun on a new “dash for gas” in a budget that was light on green pledges but contained boosts for fossil fuel companies.

Green groups reacted with dismay, arguing that the government had missed the chance to create green jobs and a low-carbon economy.

George Osbornetold MPs: “Gas is cheap, has much less carbon than coal and will be the largest single source of our electricity in the coming years. And so the energy secretary will set out our new gas generation strategy in the autumn to secure investment. I also want to that ensure we extract the greatest possible amount of oil and gas from our reserves in the North Sea.”

But what about the far larger potential of UK onshore gas? Simplly because the chancellor didn’t mention it, there is increasing hope that outside of DECC/Ofgem are becoming far more aware of shale potential through the creation of a new committee:

This presents an opportunity to look at things from a UK -centric perspective and I’ll have to point out at a far lower delegate rate than the usual conferences on the international Shale circuit. Reading the agenda, it strikes me I know everyone on it with the exception of Dr Curtis-Thomas and I hope we can aslo see some new friends and old readers there too.

I complain the mainstream press don’t take me seriously so I shouldn’t gripe when out of the blue I get invited on BBC2 Newsnight, to have a discussion on Blackpool shale gas. For those outside the UK, some cultural awareness on the eminence of interviewer Jeremy Paxman would come in handy to understand the context. The discussion went fine actuallly, but the story itself! It was awful, especially in light of the recent positive news flow on shale worldwide. A very poor story.

But despite anyone who has read this site laughing, the story was watched by a key audience of the UK movers and shakers. And right from the start that’s what they wanted to talk about. No one mentioned the quakes of course in any kind of context of their size or comparison to damaging quakes.

Two minutes in the show, not rating expertise such as Daniel Yergin’sor the head of the IEA or that American guy Barack somebody, they introduced Mike Hill, an (unpaid) adviser to Fylde Borough Council. Mr Hill’s objection was not to fracking but to regulation, saying he couldn’t trust the HSE to inspect the wells because they were poorly staffed. Does that sound like call the whole thing off to you? As I pointed out, we can afford lots of HSE staff, along with teachers, nurses and doctors with all the tax revenue we could generate.

Before I update people on Europe, let’s not forget North America where it all began. One would think six years or so into the shale transformation that not much more shale gas and oil could be left. The story of the US is now becoming one of shale gas/tight oil plays developing in what were politely called mature areas, or garbage basins if not. These were places where oil production was down to as low as 2 barrels a day per well. At old oil prices that would barely pay for maintenance, but $200+ a day isn’t too bad. But going back and re fracking the well to make it produce a 200 barrels as they are doing all over the Permian Basin of West Texas for example is interesting money, even if the decline goes to a mere 40 after a few months.

A hundred here, a hundred there and soon you end up talking real money, and making a real contribution to US energy security given the amount of wells. But more is to come

Oil and gas producers are in the infant stages of a new liquids-rich play in the South Florida basin that could revive the oil industry in rural-agricultural parts of South Florida.

This part of Florida commenced conventional oil production in the early 1940s from the upper part of the self-sourced Sunniland formation, a porous, early Cretaceous limey marlstone. Peak production from this upper porous section (and for the basin) was reached in the mid 1970s at 17,000 b/d of oil, and since inception 120 million bbl have been produced from 14 fields that were full to spill point.

There isn’t any place in the world greener than New Zealand – the entire nation is free range, isolated in their own little corner of the world. That includes natural gas, with 100% of the 4.1 BCM of gas used in 2010 domestic. When it comes to energy the country is of course well served by both hydro and geothermal, so much so that it must be about the only place in the world where hydro and renewables beat even oil in the overall energy mix, followed by gas and minimal coal.

With that in mind surely no one wants to frack the pristine country made famous as the location for Lord of the Rings. Think again:

Environment Minister Nick Smith does not look likely to launch the fracking investigation the Greens are calling for.

Green Party MP Gareth Hughes has called for a moratorium on hydraulic fracturing or fracking, a method used for extracting oil and natural gas which is locked in rocks underground.

From opposite ends of the political spectrum one thing the Guardian and the Daily Mail agree on is to invariably describe fracking as “controversial”.

But as with chemicals, earthquakes, water and dead birds, what is the reality behind the alleged controversy? Does one person for example create a controversy? I ask because the actual number of opponents of shale in the UK are so small that in any other issue it would not be worth mentioning.

Now we do live in a democracy, but if so how come the shale gas movement which mustered somewhere between 7 and 12 protestors at a conference in London Wednesday, or 30 at a national campaign launch in Manchester on Saturday gets far more publicity than this organisation which has hundreds of members publicly listed on their web site to support their view

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